How much of a toll did July's hot, dry weather take on the 2006 cotton crop? How about enough to reduce U.S. production by nearly one-fourth, the National Cotton Council's chief economist says.
Although U.S. farmers planted about a million more acres of cotton last spring, July's 100-degree-plus temperatures and lack of rainfall may have pushed 2006 production to as low as 18 million to 19 million bales, according to Gary Adams, Council vice president for economics and policy analysis.
“Two or three weeks ago, we probably would have been looking at a crop in the 20-million-bale range,” Adams said. “But we've seen the crop steadily deteriorate with the dry conditions and the high temperatures.”
Adams, whose comments came during the joint summer meeting of the American Cotton Producers and The Cotton Foundation in San Antonio, based his assessment on the weekly, crop condition reports compiled by USDA's National Agricultural Statistics Service.
The reports, which are released each Monday, list the percentages of the crop in each state that are very poor, poor, fair, good and excellent. NASS' first survey-based estimates of the 2006 crops were released on Aug. 11.
Adams conceded the crop progress reports are subjective and possibly less reliable than NASS' objective forecasts, which are based on surveys returned by growers and boll counts taken by NASS enumerators in the field. But they also provide a basis of comparing crops at different stages of development from year to year.
“We've seen some notable changes in the last two to three weeks in some Mid-South and Southeast states in terms of the percentages of the crops rated poor to very poor,” he said.
“There's not much hope left for Alabama's crop,” said Sam Spruell, Alabama's representative on the American Cotton Producers, the group that represents the producer segment of the Council. Spruell hails from Mount Hope, Ala., a fact that wasn't lost on his fellow ACP members.
Adams noted that the July 31 crop conditions report said that 75 percent of Alabama's cotton crop was rated poor/very poor. “If you go back over the last 20 years of these reports, we had only one state — South Carolina in 1986 — that was actually listed above the 75 percent poor/very poor level,” he said.
“So these are some of the worst crop conditions we've seen in a number of years.”
In the July 31 report, Texas and Oklahoma crops were listed at slightly above 50 percent poor/very poor; Georgia, 38 percent; Mississippi, 31 percent; and South Carolina, 23 percent. The U.S. crop was rated at 34 percent poor/very poor.
Texas producer, Ricky Bearden, chairman of Plains Cotton Growers Association, said that of the estimated 3.9 million acres planted on the High Plains this spring 1 million or nearly 25 percent have been reported “failed.” Statewide, the latest forecast for failed acres is 1.54 million out of the 6.4 million acres that were certified as planted July 15.
“North of Lubbock, very little of the dryland cotton will be taken to harvest,” said Bearden. “The irrigated acreage north of Lubbock looks very good, but, south of Lubbock, it's not as good.”
Adams displayed a chart comparing the June-October U.S. Cotton Condition Index for the 2004 and 2005 crops, which produced record and near-record national average yields of 855 and 831 pounds of lint per acre, with that for the 2006 crop.
“In 2004, we had some of the highest rated crop conditions we've seen over the last 10 years,” he said.
“2005 was a little lower than what we had in '04, but we still had very good crop condition ratings. The 2006 crop condition ratings are running not quite at the 10-year lows.
“I don't want to spend too much time on this chart, but when we look at this over a period of time, the higher ratings generally are correlated with higher yields and the lower ratings with lower yields and that could be born out in 2006.”
USDA had been forecasting the 2006 crop at 20.5 million bales, based on historical trend yields and abandonment, said Adams. “We'll see on Aug. 11 whether USDA is picking up any actual declines in yield in its grower surveys and objective field counts.”
The Agriculture Department's June 30 planting intentions report put the 2006 crop at 15.28 million acres, a 7.2 percent increase over 2005's actual planted acreage of 14.25 million acres. (The June 2005 planting intentions report had planted acres at 14.03 million acres.)
The Southeast, Mid-South and Southwest regions reported planting increases of 10.7, 6.5 and 8.3 percent, respectively, in 2006 while the West declined by 19 percent as California growers continued to shift more of their land to permanent crops.
“Going around the room to the different states represented here today, I don't think we would back off that 2006 figure by more than 100,000 to 150,000 acres,” said Adams.
On the demand side, U.S. mill use appears to be continuing to slide with the annualized rate of spinning dropping to 4 million bales in recent weeks. That's down from 5.6 million bales in early June and more than 6 million bales back in March.
“Most of you know about Avondale, which was one of our bigger mills, and the problems they've had,” he said. “July was the last month they planned to spin cotton. We don't know how much of that will be absorbed by other mills, but that's a concern that we have for the remainder of 2006.”
Exports, on the other hand, have remained strong. USDA was forecasting nearly 17 million bales of exports with 10 days left in the marketing year that ended July 31. “With about a week and a half of reporting dates left, it looks like we will exceed the 17-million-bale forecast, which would put us at record levels,” he said.
“It has all hinged on China, which has accounted for about 50 percent of the shipments of U.S. cotton. If you look back a few years, China barely figured in the export market. In the last couple of years, we've seen China expand to 19 million bales of imports in 2005 and to about 20 million bales in 2006 in purchases from all countries.”
If current weather conditions continue, the resulting decline in U.S. production could push ending stocks and the stocks-to-use ratio to the lowest levels in several years, according to Adams.
A 20-million bale crop in 2006, for example, could push ending stocks to 4.5 million bales or a stocks-to-use ratio of 21 percent. An 18.5 million-bale crop would leave ending stocks of 3.9 million bales and a stocks-to-use ratio of 19 percent. That compares to 6.4 million bales and 28 percent in 2005-06 and 7.2 million and 36.8 percent in 2004-05.
(The figures for an 18.5-million-bale crop for 2006-07 are derived by adding expected beginning stocks of 6.4 million bales to 18.5 million for a total supply of 24.9 million bales. Subtracting mill use of 5.4 million bales and exports of 15.6 million bales (due to a smaller crop) or total use of 21 million bales would reduce ending stocks to 3.9 million bales and give a stocks-to-use ratio of 19 percent (3.9 million bales divided by 21 million).